The reasons why large digital technology firms sometimes cause concerns about unfair competition, and a summary of EU and UK investigations and litigation in response to those concerns

By Stephen Critchley and Agnieszka Szewczyk

The European Commission has long talked of the need to regulate the behaviour of large digital technology companies, and to harmonise these regulations between Member States. In a July 2020 statement, Margrethe Vestager, the EU Competition Commissioner said that “when big companies abuse their power, they can very quickly push markets beyond the tipping point, where competition turns to monopoly”.

This article (the first in a series) explains various characteristics of digital markets that can sometimes lead to competitive concerns, and lists consequent regulatory and court actions. Later instalments in the series will take a deeper dive into some of those actions, and explain new EU legislation aimed at ex ante prevention of anticompetitive conduct (the Digital Markets Act).

Competitive issues in digital markets

Online marketplaces, search engines and social media have become an integral part of everyday life. The main providers of the digital platforms for these services, such as Amazon, Google and Meta (Facebook), are assisted by “network effects” – i.e., the more consumers, merchants, and content providers use a service, the better it becomes for all users. Leading firms can therefore acquire an ever-increasing mass and gravitational pull, which can make it hard for competitors to enter the market or grow their market share.

The competitive landscape may also be shaped by the high cost of investment necessary for such services to remain state-of-the-art. Competition regulators have become increasingly concerned that such factors have led to substantial barriers to entry into digital markets.

Digital platforms typically offer “intermediation” services – i.e., rather than offering a product to the consumer, they offer a platform on which others provide it – although they may use the platform to offer their own products too. Google, for example, started out as a platform for internet searches, and later offered its own products in tabs next to the “natural search” results. Amazon did the opposite. It started out as a retailer, and then became a platform for itself and other retailers.

Achieving scale is not unlawful, even when cemented by network effects. However, the abuse of that position might be. European regulators have focused on major platform providers when they have allegedly engaged in the following practices:

Managing their platforms in a way that prefers their own products to those of their competitors;
Exploiting for competitive advantage the data that they harvest through their platforms;
Limiting interoperability with other platforms; and
Imposing tying, bundling, pre-installation, default-setting and prominence requirements on the makers of devices used to access their (and their competitors’) platforms.

EU and UK investigations and litigation

In the past few years, allegations of such conduct have led to a constant stream of cases before EU and UK courts and regulators. The main cases are as follows.

 

Firm
EU/UK
Type of abuse alleged
Details

Google
EU
Self-preferencing
On 27 June 2017, the European Commission (“EC”) fined Google EUR 2.42 billion for abusing its market dominance by preferring its own shopping service to those of its competitors in its search engine results.

On 10 November 2021, this decision was upheld on appeal.

Google
EU
Exclusivity and tying practices
On 18 July 2018, the EC fined Google EUR 4.34 billion for, amongst other things; (a) requiring manufacturers to pre-install Google’s browser app (Chrome) and search app as a condition for licensing Google’s app store (the Play Store); and (b) paying manufacturers and mobile network operators to exclusively pre-install the Google search app on their devices.

Google
EU
Unconnected abuse of dominance
On 20 March 2019, the EC fined Google EUR 1.49 billion for abusing its dominance in “online search advertising intermediation” – a service whereby the embedded search functions within news and other websites deliver adverts that respond to a search alongside the website’s own content that responds to that search – by imposing restrictive clauses in contracts with the websites to prevent them from advertising Google’s rivals.

Apple
EU
Self-preferencing

Exclusivity and tying practices

On 16 June 2020, the EC launched two investigations into Apple. The first concerns Apple’s refusal to allow payment systems other than its own (Apple Pay) to use the contactless payment technology on iPhones and iPads. The second concerns two restrictions imposed by Apple’s agreements with companies wishing to distribute apps through its app store, namely the compulsory use of Apple’s in-app purchasing system, and restrictions on the ability of developers to inform app users of alternative purchasing options outside the apps.

Amazon
EU
Access to data

Preferential treatment

On 10 November 2020, the EC sent a Statement of Objections to Amazon, alleging that it had used commercially sensitive data of sellers on its platform to the advantage of its own competing retail service.

The same press release said that the EC had also opened a second investigation into the possible preferential treatment of sellers on the platform who used Amazon’s logistic services to fulfil orders.

Google
UK
Self-preferencing

Exclusivity and tying practices

On 29 December 2020, Epic Games, the maker of the popular game Fortnite, issued a claim alleging abuse of dominance by Google in the Android app distribution and in-app payment markets following Google’s removal of Fortnite from its Play Store after Epic introduced direct payment options for players as an alternative to Google’s own payment processor.

Google
UK
Access to data

Self-preferencing

On 8 January 2021, the UK’s Competition & Markets Authority (“CMA”) launched an investigation into Google’s “Privacy Sandbox,” which removes third party cookies in Chrome. These cookies can be used by third parties to gather data on users and target advertising to them. The Sandbox protects users’ privacy, but cookie owners are concerned that Google will monopolise data-gathering for commercial advantage.

On 11 February 2022, the CMA announced that it had agreed commitments with Google, including that, when using the Sandbox,  Google would not share data between Chrome and other parts of Google which could give it a competitive advantage, or engage in any other form of self-preferencing.

Apple
UK
Exclusivity and tying practices
On 4 March 2021, the CMA launched an investigation pursuant to complaints from app developers that, under Apple’s terms, they can only distribute their apps on iPhones and iPads via Apple’s own app store; and in-app purchases must use Apple’s proprietary payment system for which Apple charges a commission of up to 30%. The second complaint echoes the EC investigation launched on 16 June 2020, referred to above.

On 11 May 2021, an application for Collective Proceedings on behalf of Apple device users was issued by Dr Rachael Kent against Apple in relation to these practices.

Facebook
UK
Access to data
On 4 June 2021, the CMA launched an investigation into whether Facebook uses data – collected via its advertising services and its single sign-on option (which allows users to sign into other services with their Facebook login) – to gain an unfair advantage over competitors providing online classified ads (Facebook Marketplace) and dating services (Facebook Dating).

Facebook
EU
Access to data
On the same day, the EC launched a similar investigation, into whether Facebook uses data from companies advertising on its platform in order to compete against those companies. The concern particularly relates to the providers of online classified ads who advertise on Facebook and compete with Facebook Marketplace. The investigation is also assessing whether Facebook ties the Marketplace to its social network.

Google
EU
Access to data
On 22 June 2021, the EC launched an investigation into whether Google is abusing its dominance in the provision of intermediation services between advertisers and publishers who display advertisements on their websites and mobile apps.

In particular, the investigation is examining whether Google is restricting its competitors’ access to users’ data – that can be used to determine which advertisements are likely to be of interest to which users – whilst making use of such data itself.

Google
UK
Exclusivity and tying practices
On 29 July 2021, an application for Collective Proceedings was issued against Google by Elizabeth Coll on behalf of users of apps on Google’s Android operating system who, it is alleged, pay excessive prices as a result of Google’s insistence that the purchase of apps in its Play Store or purchases within those apps must use its proprietary payment system, for which it obtains a commission. The action is therefore similar to that of Dr Kent against Apple, referred to above.

Microsoft
EU
Bundling
On 26 November 2021, Nextcloud GmbH and other companies who offer services in competition with Microsoft Teams and OneDrive filed a complaint with the EC accusing Microsoft of anticompetitive behaviour in bundling OneDrive, Teams and other services with Windows. The complaint – which has not yet led to an investigation, but which is reported here – has parallels with one of the first “big tech” antitrust disputes; Microsoft’s bundling of its browser (Internet Explorer) with Windows in the late 1990s.

Facebook
UK
Access to data
On 14 February 2022, an application for Collective Proceedings on behalf of Facebook users was issued by Dr Liza Gormsen alleging abuse of dominance by Facebook in not paying users for their personal data and, instead, requiring them to agree to terms of service which include giving Facebook permission to collect, share and use that data in exchange for ‘free’ access to Facebook.

Written by Stephen Critchley and Agnieszka Szewczyk

Edited by Gary J. Malone

 

Read A List of the Big Technology Companies’ Multiple Antitrust Battles (For Those Who Have Lost Track) at constantinecannon.com